Media Contact: Randolph Yunker - (516) 571-2490
Getting Started
Harvey B. Levinson, the newly elected Chairman of the Board of Assessors, began his six-year term of office on January 2, 2004. As his first official action, the Chairman aggressively recruited real estate assessment specialists with expertise in appraisal and computer-assisted mass appraisal to serve as the core of a professional management staff.
The core of the Chairman's staff includes two senior deputies who served as assessors for a number of cities throughout the country. The deputies hold the professional designation of Assessment Administration Specialists. Only an estimated 100 individuals worldwide have been recognized and granted this professional designation by the International Association of Assessing Officers.
In addition to individuals with real estate and assessment backgrounds, the Chairman of the Board of Assessors hired a certified computer systems engineer and programmer who have been working with Cole Layer Trumble Company (CLT) consultants and computer programmers to learn the specific and unique computer programs that will eventually be surrendered to the Department of Assessment for in-house reassessment. Currently, CLT is in its second year of a six-year fixed price contract that may be cancelled on an annual basis.
Improving the Annual Reassessment Process
The Department of Assessment and the County remain committed to performing annual updates and are working to ensure that the market value estimates upon which assessments are based will change each year in accordance with trends in the real estate sales market in Nassau County. An assessment roll that reflects the ever-changing marketplace is unquestionably more accurate than one that remains static and is, therefore, more equitable and secure against property assessment challenges.
The first annual update, which was prepared under the direction of the previous Chairman of the Board of Assessors, made substantial improvements in the quality of the residential assessments as compared with the initial revaluation. The current Chairman has brought all available resources to bear on further enhancing the quality of the residential roll to be released in January 2005 and to making major changes to the commercial valuation process for that roll.
Residential model enhancements will significantly reduce the number of errors
The process response time to building permits filed with the Department of Assessment by the towns, cities and villages has been greatly improved. The existing backlog of over 12,000 building permits leftover from the previous administration has been addressed and eliminated. The additional assessed value generated by the inclusion of the outstanding building permits will be applied to the 2005-06 assessment roll.
The Chairman of the Board of Assessors has been monitoring CLT's work to improve the accuracy of the values assigned to properties in previous updates. He has made a series of requests to CLT to improve their various property groupings and valuation methodologies. They have fully cooperated and have made the following changes which will be applied to the January 2, 2005 Tentative Assessment Roll:
- For the 2005 revaluation, modifications have been made to the system that forces the computer to select comparable sales that are physically located closer to the property being appraised. Thus, eliminating the use of comparable sales that might be located several miles away.
- In addition, differences due to location across school district and municipal boundaries have been analyzed so that the results are more properly considered in the valuation process. The number of neighborhoods has been increased from 150 to over 260 and the system has been modified so that it should not use sales in different neighborhoods, school districts, nor municipalities. In the rare occasion where this does occur, locational adjustments will be utilized to adjust for the difference in value.
- Geographic Information Systems (GIS), field inspections and video images were used to identify a property's CDU (Condition, Desirability and Utility) rating. The resulting review allows the Department to more properly consider the influence of location factors such as proximity to railroads, expressways and major roads. As a result, nearly 22,000 properties had characteristics changed that will now be considered in the valuation process.
- The average residential assessment increased 22% from 2003 to 2004. At the request of the Chairman, more than 53,000 residential properties (that increased more than 35% due to such factors as new construction, significant inventory changes, water view and proximity to water, and similar considerations) were identified, analyzed and are being taken into consideration on the current reassessment. For the current and future reassessment, comprehensive edit reports will be used to identify properties that must be reviewed before values are finalized.
- Recognizing the fact that there are many sub-neighborhoods within each neighborhood, the Department of Assessment utilized colored GIS maps to identify differences in value within each neighborhood due to location. The outcome of this project resulted in 38,726 parcels where changes were warranted due to location. The data in our system has been changed to reflect these differences.
- The final reconciliation process, the systematic mathematical process that arrives at a single conclusion of value for each parcel, is being modified this year in an effort to achieve greater accuracy. In the previous two reassessments, the system would generate seven (7) indicators of value such as the five (5) comparable sales, the value predicted by the computer model, and the weighted estimate. Of these seven (7) indicators of value, the two highest and two lowest were eliminated and the remaining three (3) indicators were averaged to arrive at the final estimate of value for each parcel. This sometimes resulted in the best indicators being eliminated from consideration. For example, it was possible that the trended sales price of the subject property could have been eliminated in the final estimate of value.
This year, the Department of Assessment has developed a process where the best indicators will be retained for consideration in arriving at the final estimate of value for each parcel. Comparable sales too different from the subject property will be eliminated for consideration - even if they are one of the five (5) comparable sales. The "good" comparable sales will be weighted based on their similarity with the subject property to arrive at a weighted estimate. The weighted estimate, along with the computer model value indicator and the time-adjusted sale price (if any) will be averaged to arrive at the final estimate of value for all residential parcels. This change is expected to enhance the accuracy of the values greatly.
Accuracy of Data Used to Value Properties
The Department of Assessment has created a sales verification document and data mailer that will be sent to all parcels listed as sold based on Real Property Transfer Report (RP-5217) filings or new STAR applications. Beginning in 2005, the Department of Assessment Field Division, in conjunction with the data mailer, will make a concentrated effort to perform full interior and exterior inspection of all transferred properties. The enhanced sales verification process will help perfect models.
Commercial Properties Account for 85% of Tax Refunds
In addition to fine-tuning Class 1 (Residential) values, the Chairman of the Board of Assessors has required the County's reassessment agent to place greater emphasis on improving the accuracy of the values assigned to non-residential parcels that has accounted for approximately eighty-five percent of the refunds paid as a result of successful property assessment challenges in recent years.
Department of Assessment and CLT are working together to develop new methodologies to enhance Class 4 (Commercial) and Class 2 (Co-ops, Apartment Buildings and Condominiums greater than 3 stories) valuations. CLT and the Department of Assessment will review and apply - in appropriate cases - any reductions made to specific properties by the Assessment Review Commission (ARC). Future values will consider the rationale arrived at by ARC in settling challenges. In each case, the reassessment contractor will provide justification for any value that remains in conflict with those determinations made by ARC. This task force continues to meet weekly and has provided guidance on the following:
- Enhancements to the valuation process relative to 4-6 family residential properties.
- Enhancements to the valuation process relative to all Class II properties.
- Development of investment ratings to be incorporated into the valuation process.
- Improved definition and identification of commercial properties by quality of construction (i.e. Class A Office Building).
- Development of different neighborhood groupings for co-ops and condos.
The development of investment ratings to be applied to Class II and IV properties will increase the number of models within neighborhoods that can be used to better define properties. An investment rating is the analysis and consideration of the location, condition and amenities within a neighborhood. Capturing these factors correctly will allow the CAMA System to predict more values accurately. Previously, appraisers used system overrides to adjust values for properties with varying location, condition, and amenity features. The investment ratings incorporated into the system now provide 10 models: the base model plus nine other models with different investment ratings.
The Chairman has required the contractor to enhance models to value the high end condominiums and co-operative apartments, in addition to studying the effects and influence of a unit's location in establishing its assessed value.
Small Claims Assessment Review
Beginning with the 2005-06 Assessment Roll, once the additional staff, funding and office space is secured so that the dependence of contracting representation can be eliminated, the Department of Assessment has agreed to assume responsibility for defending Small Claims Assessment Review (SCAR) challenges from the Assessment Review Commission (ARC). Currently, the Department of Assessment is developing a staff to defend the County at hearings in SCAR proceedings. In the interim, the County has been using the services of seven experienced appraisal consultants acting under the direction of Deputy County Attorneys assigned to assist in the revaluation and assessment review reform efforts. The contracts are administered by the staff of the Assessment Review Commission. The Department of Assessment's hearing defense staff now under development has begun assisting the County's hearing defense program and will continue to expand its role.
The function of both the Department of Assessment staff and the consultants in these cases is to present evidence at the hearing and advocate for an appropriate determination by the hearing officer based on the facts presented. All cases will have previously received the opportunity for a conference with ARC for purposes of disposing of the proceedings pre-hearing. The County's hearing defense team will have the benefit of the data collected and appraisal analysis prepared by ARC as part of its conference process and will continue to use the services of outside appraisers to prepare narrative appraisal reports for presentation at hearings in high-value residential cases (as it does now in commercial cases).
Apart from improving the quality of its defense effort, the Chairman of the Board of Assessors has worked to improve the quality of the hearing officer panel. Nassau County paid over $31 million dollars in SCAR tax refunds from 2001-2003 yet the hearing officers who settle property assessment challenges in New York State Supreme Court receive less training than New York City Administrative law judges who adjudicate parking code violations.
To help educate SCAR hearing officers and enhance the decision-making process, the Chairman of the Board of Assessors has asked the Nassau Community College President to create a two semester "Property Tax Assessment Certificate Program." The Certificate Program would include introductions to important fields of study including: assessment systems, mass appraisal, commercial and residential data collection, statistical analysis, and assessment administration.
Legislative Initiatives
The Chairman of the Board of Assessors is working with the Nassau County State legislative delegation to craft legislation providing homeowners with the time they need to adjust to the tax increases that occur when market levels change each year.
The Chairman's legislative proposal calls for a five-year phase-in of all increases in assessments that occur as a result of changes in the full market value of residential properties. Under current law, only Class 2 (Co-ops, Apartment Buildings and Condominiums greater than 3 stories) and Class 4 (Commercial) properties in Nassau County receive the benefit of a multi-year phase-in of assessed value.
The proposed legislation would eliminate the confusing fractional levels of assessment set each year, by using the fair market value of a property. Currently, the Board of Assessors is valuing residential property at 1 % of full market value. For example, if a home is valued at $500,000, its value for assessment purposes is $5,000. Unless this legislation is signed into law, the taxable value will be $2,500 in 2005-06 and approximately $1,250 in 2006-07.
By eliminating the use of fractional assessment levels, home and business owners would be in a better position to equate their property's assessed values with the taxes they pay. Each time the level of assessment is lowered by fractional levels, a taxing jurisdiction is forced to rapidly increase its tax rates to generate the same amount of revenue. If full market value is used for taxing purposes - while having no effect upon the actual budget revenue collected by a taxing jurisdiction - tax rates will decrease significantly.
Adoption of the proposal would further reduce the portion of real estate tax reductions that are implemented as refunds guaranteed by the County. The existing phase-in for commercial and apartment property will substantially aid in avoiding refund liability as assessments are adjusted annually in response to market value change. If the Legislation were adopted, the same effect would apply to residential property; assessment reductions granted by ARC or in Small Claims hearings would largely affect taxes to be phased-in and levied in future years and, therefore, not involve refunds.
The proposed legislative initiative passed overwhelmingly in the State Assembly but failed to move out of committee in the Senate.
Earlier this year, the Chairman successfully lobbied State legislators in Albany to overturn an unintended multi-million dollar tax shift that resulted when the County set a level of assessment at 1% of full market value for Class 3 (Utilities) properties last year. The Chairman received the support of the Chief Executive Officers from LIPA and Keyspan in acknowledging that they were the beneficiaries of an unintended windfall and that the tax money should be returned. The tax shift that impacted the owners of co-ops, condominiums and small business owners under the Long Beach School District's unique two-class property assessment system was remedied through special legislation.
In other areas, the Chairman of the Board of Assessors has embarked on a highly touted initiative aimed at ending the profitability and combat the growth of the illegal conversion of single-family homes to multi-family dwellings. Effectively, confirmed illegal multi-family dwellings will be reclassified from Class 1 (Residential) to Class 4 (Commercial) property for taxation purposes. On average, the commercial property tax rate is 2 ½ times higher than the residential rate.
In many areas, single-family homes are often promoted and sold as 'income producing' based on an established or possible installation of an illegal apartment. The lure of additional income influences the sale and inflates the selling price of the property. Since homes are valued and assessed based on recent sales prices, the 'inflated' sales price has the potential to increase the assessed value and taxes on single-family homes in the neighborhood. It has been reported that at the end of 2003, the number of illegal apartments in Nassau and Suffolk Counties were estimated at over 100,000.
Summary
The Department of Assessment, under the direction of the Chairman of the Board of Assessors, will continue to work to improve the accuracy of the property assessment roll and strive to ensure that the values assigned to properties are fair, equitable and defendable. By doing so, public acceptance of the values will serve to diminish the number of challenges and, therefore, the refund liability of the County. |
